Author: Dr. Angelika Hellweger
18 May 2023
2 min read
Angelika Hellweger of Rahman Ravelli details the Russian decree giving it the power to take control of other countries’ assets in its borders.
Russia has issued a decree giving its government the power to place property belonging to people or entities from “unfriendly” countries into the interim administration of the Federal Agency for State Property Management.
Russian President Vladimir Putin issued Decree No. 302, using the sweeping powers he has under Russian counter-sanctions laws, as a response to what was called the “need to take immediate measures against the actions of unfriendly states.”
The decree can be amended by presidential decree without having to go through any legislative procedures or court proceedings.
It can be used against those who are believed by the Russian government to have deprived (or have threatened to deprive) the Russian Federation, Russian legal entities or individuals of the right of ownership of property – those states that have committed “unfriendly’’ actions against Russia. It can also be used against those who have restricted (or have threatened to restrict) the property-related rights of the Russian Federation, Russian legal entities or individuals.
The list of “unfriendly foreign states” is maintained by the Russian government and may be expanded if more countries impose sanctions on it.
The decree can be applied broadly and is temporary in nature. It can also be imposed in reaction to threats to Russia’s economic, energy or any other type of security. In such a case, an interim manager will be appointed who is allowed to exercise managing rights and ownership rights. However, the right to dispose of the assets is excluded - the owners cannot be deprived of their assets. The costs of managing such assets are to be covered by the revenues generated by the asset.
The decree mirrors similar measures that have been taken against Russian-owned companies and assets by the UK, United States, European Union and Canada - who have also cited energy security concerns since the war in Ukraine began last year.
Germany put refining assets owned by Russian oil giant Rosneft under the control of a government agency last year. Last year also saw Germany go even further than the Russian decree by setting up a holding company to carry out a possible nationalisation of Gazprom Germania, the energy business that is a subsidiary of Russian energy corporate Gazprom.
As Russia has already taken temporary control of assets belonging to Finland and Germany, it would be surprising if it did not take a similar approach to assets belonging to other nations in the near future.
It is fairly obvious that any dispute resolution with regard to this decree is likely to prove challenging. Russia has granted Russian courts exclusive jurisdiction over such disputes, and anyone affected by the decree is unlikely to receive useful legal assistance from the country where they are based. This leaves those whose assets are subject to the decree with very few options.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.